Plutocracy in America

    The Nation just ran a good piece on American Plutocracy. Plutocracy, for those of you who don’t know, is a political system in which those with wealth rule. Under such a system, opportunities for social mobility are limited, and there’s an enormous disparity between those with money (and power) and those without it. Of particular interest in the Nation article is a graph demonstrating this extreme inequality as it’s evolved over time. Here are the key data points:

    The greater the gap between the rich and everyone else, the more dangerously unstable economies become. In 1928, a year before the U.S. economy nose-dived into depression, the top one-hundredth of 1 percent of U.S. families averaged 892 times more income than families in the bottom 90 percent.

    In 1980, the last pre-Reagan year, families in the bottom 90 percent averaged $30,446 in income, after adjusting for inflation, $72 more than the $30,374 comparable families earned in 2006. The top 0.01 percent in 1980 took home an average $5.4 million, less than one-fifth the $29.6 million average income of the super-rich in 2006.

    In 2006 the top 0.01 percent averaged 976 times more income that America’s bottom 90 percent.

    And I imagine that it’s gotten worse since 2006… And, to make matters worse, while income has risen for this group, the top marginal tax rate has fallen precipitously… Here are a few more take-aways from the graph:

    In 1944 the top marginal tax rate – the rate on income in the highest tax bracket – hit 94 percent. In that year, taxpayers making more than $1 million, in 2005 inflation-adjusted dollars, paid Uncle Sam 65 percent of their total income in tax.

    In 2005 taxpayers making more than $1 million faced a top marginal rate of 35 percent. Their deep pockets paid just 23 percent of their income in federal tax.

    And, as a result of the rich making more money, and keeping more money, our nation’s wealth is concentrating in the hands of a relatively small number of people. We are essentially creating an American aristocracy.

    There’s a hell of a lot that we need to do as a nation, but, right up there with getting ourselves out of the middle east, and funding alternative energy research, we need to start raising taxes on the super-rich. And we need to do a better job of framing the debate. We can’t allow an unchallenged FOX News make the tax debate about the 47% of American households that pay no federal taxes. We need to make it about the wealthy, who aren’t paying their share, and the companies like Exxon that earn tens of billions of dollars a year and contribute nothing in the way of taxes. We’ve got to stop Glenn Beck and his ilk from making this about “those conniving poor,” and make it about the facts. We need to show people how the effective tax rate on the rich has fallen precipitously over time, and explain how that increases instability. We need to show people why it is that the American middle class is drying up and blowing away.

    And I realize that some will read this and say that I’m advocating class warfare. I’m not. I’m not saying that we should take money from the rich and hand it over to the 50% of Americans that have nothing. I’m not a proponent of wholesale wealth redistribution. What I am in favor of, however, is the wealthy paying their fair share, so that we can educate our children, help our fellow citizens when the need a hand, and invest in the future our nation. And, if the Democrats can’t articulate that, we need a new party that can.

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      37 Comments

      1. tommy
        Posted April 19, 2010 at 6:34 am | Permalink

        Your last sentence says it all.

      2. Knox
        Posted April 19, 2010 at 7:08 am | Permalink

        You’d think that the rich would realize that the current system isn’t tenable. They won’t be able to protect themselves with their private security armies forever.

      3. Peter Larson
        Posted April 19, 2010 at 7:15 am | Permalink

        The fleabaggers believe that inequality is good. The rich must be rich because of hard work and perseverance. We, as citizens, deserve to reward and celebrate these economic demigods by remaining poor and making lots of white babies.

        I thought Plutocracy was a government where Pluto the Dog was in power.

      4. The American Dream
        Posted April 19, 2010 at 8:00 am | Permalink

        The American dream is really a socialist dream, taken advantage of by a few greedy assholes trying to make a buck off it. I’ll take socialism anyday, compared to the flawed system we have now…we the people have already lost the war.

      5. Edward
        Posted April 19, 2010 at 8:11 am | Permalink

        Follow the “aren’t paying their share” link. It’ll take you to the book by Bill Gates Sr. on why the rich should pay more in taxes, due to the fact that they benefit disproportionally from the U.S. infrastructure, etc. It’s a good argument.

      6. EOS
        Posted April 19, 2010 at 8:36 am | Permalink

        Tea Party members believe in equality of opportunity, not equality of outcomes. They believe that the individual is in the best position to determine how to satisfy their needs and they don’t want to rely on the benevolence of government for essentials. Tea Party members believe that hard work should reap rewards and that it fosters freedoms and self-determination and that government handouts foster dependency and laziness. I challenge you to find individuals other than the ruling elite who exist under socialist governments and who think it works or is good for everyone or even for most. Like socialism ? Move to Venezuela or Cuba. We have not lost the war – we haven’t yet started the fight.

      7. Robert
        Posted April 19, 2010 at 8:42 am | Permalink

        EOS, it’s good to see you’ve dropped all that Christianity stuff for this much more believable line.

      8. Independent Jones
        Posted April 19, 2010 at 9:05 am | Permalink

        and when they don’t get their way, or that doesn’t work out for them, they just blow up a building, or fly a plane into it, or blame it on a black or hispanic. They have the opportunity to do good, but their outcome is usually being an asshole.

        The people you hear complaining about Cuba or Venezuela the loudest, are the ones who left. Like Abraham Lincoln said, you can’t please all of the people all of the time…

      9. Stephen
        Posted April 19, 2010 at 11:00 am | Permalink

        Someone needs to start posting photos of investment bankers so those of us who work in food service in New York don’t accidentally spit in the wrong person’s food.

        And Mark you said it best way back when – We could have bought a lot of guillotines with that bank bailout money.

      10. Posted April 19, 2010 at 5:54 pm | Permalink

        Wealth redistribution always seems to be a buzz-word that carries negative connotations. But, the opposite, debt redistribution is perfectly fine with most people. And that’s really what this is – when the gap between the rich and the poor stretches as far as it is today, the debt, that is carried by the poorest of people, breaks the back of the economy.

      11. Posted April 24, 2010 at 5:36 am | Permalink

        I’ve said this before and will say it again: people who “pay no taxes” in fact pay more than 7% of their income in payroll tax (14% if self employed). They pay this no matter how little they make, on every dime they make. Someone making $1,000,000 in wages pays federal income tax but NO payroll tax on the top $900,000. I sould take anti-tax groups much more seriously if they would even mention this.

      12. Leon Ewers
        Posted November 3, 2010 at 7:13 pm | Permalink

        Ok let’s tax the rich more.

        •How much should we tax them?
        •Should there be a cap on how much the rich are taxed?
        •How should the taxes collected be used?
        •who should this debt be redistributed to and in what percentage?
        •Should the rich be able to benefit like everyone else does in this debt redistibution?
        •Should we put limits on the way debt redistribution is spent/used by those it is being redistributed to?
        •What should we do if someone misuses the debt redistributed to them?
        •What do we do when there are more people receiving debt redistribution than there are people paying the debt?
        •What do we do when all those paying the debt move to greener pastures? Then who should pay the debt when no one is left to pay it?
        •What do we do if all the rich people decide to stop working, stop earning any money at all and they just live on what the currently have? Do we raid them?

      13. Graham
        Posted November 4, 2010 at 8:06 pm | Permalink

        The system is in serious need of repair, but socialism is not a solution. We have become the largest debtor nation ever through re-distribution of wealth. What has it solved? People mostly need opportunity and not charity. Hand outs from government have not solved the problem. The “war on poverty” &” the great society” in the end created… more poverty, especially poverty of spirit. We are a nation of can do, of overcoming, of finding a way, finding the solution and helping others as we over come great obstacles! It’s time to believe we can be great again! YOU have an idea others would benefit from, your discovery could impact millions! don’t wait for government & stop focusing on what you don’t have. Take what you have and increase it! Than share it!

      14. John Galt
        Posted November 5, 2010 at 8:13 am | Permalink

        Blessed be the job creators. We should worship at their feet, not daring to make eye contact with them. They should live in castles, protected by private armies. They shouldn’t be troubled by our squalor. We should work for them until our backs break, and give them our young daughters in tribute. Instead, you short-sighted socialists would have them pay their “fair share” and participate as though they were like us. Have you no idea how cruel that is?

      15. Stella M
        Posted November 5, 2010 at 1:42 pm | Permalink

        Somehow I don’t think this John Galt is the other John Galt…

      16. kjc
        Posted November 5, 2010 at 1:53 pm | Permalink

        Graham, could you simplify things a little more?

      17. Andy C
        Posted November 5, 2010 at 3:47 pm | Permalink

        “What do we do if all the rich people decide to stop working, stop earning any money at all and they just live on what the currently have? Do we raid them?”

        Are the rich people actually working? Our peasant class is in Asia. Children working for pennies a day so more profit goes to our “rich working people”. As for the U.S.A lower class, we have service jobs, unemployment, large prisons, and cheap shitty products that don’t last a year. I love it when billionaires like Leon Ewers take time out to talk to us little people.

        Graham, You’re right that people mostly need opportunity and not charity. Who’s getting the opportunities? Those in public schools are way behind coming out of the gate. If we invest in schools then we wouldn’t need to put so much into prisons and food stamps but we know that will never happen. Give the people just enough to survive but not get on their feet. It’s the American way.

      18. Juan Valdez
        Posted January 3, 2011 at 8:36 pm | Permalink

        You’re totally full of BS. You are a pitiful excuse for class warfare. Viva the Revolution … may you get hung first!

      19. Posted January 5, 2011 at 9:54 am | Permalink

        1% of the nation owns 99% of the wealth? – if this were any other time in history those 1% would be dead already

      20. Kim
        Posted January 5, 2011 at 4:29 pm | Permalink

        The rich are forming private armies. They know what’s coming.

      21. Allan
        Posted January 11, 2011 at 4:38 pm | Permalink

        I know many people in the top tax bracket, none of which complain about their income taxes. The argument for lower taxes is mostly a political tool.

        The socio-economic issue is just one of many special interests like abortion, street crime, guns, gays and defense of America that is played by the republican party to bring in votes. The republicans in power understand as populations rise people will naturally move toward more social minded governing systems; this is the real fear.

        The amount of the top taxable income bracket is a tool also, many hard working business owners can make $250k/yr this brings the republican party a larger pool of potential members. Would anyone have argued recently for keeping the tax-cuts for the rich if the bracket started at say $2mil/year?

      22. Posted February 3, 2011 at 12:34 pm | Permalink

        Maybe it’s time for a REAL tea party, not this fraud which is really just a political arm of rich white members of the GOP. The REAL tea party would not stand for this plutocracy that is phasing out the working middle class in America.

      23. cyndie
        Posted February 24, 2011 at 9:06 am | Permalink

        I sheepishly have been reading th previous comments mainly due to the fact I’m not politically charged or knowledgable. What I do understand is that these so-called “tea parties” are run by the elites, the republicans.
        I am a recovering republican, 20 yrs., not 1 republican vote…thank you.
        Plutocracy is here & I dread the ultimate death of the middle class

      24. Alfie
        Posted February 24, 2011 at 11:39 am | Permalink

        Cyndie,

        I thought that this might cheer you up.

        http://i.imgur.com/g0clZ.jpg

      25. Larry Allen Brown
        Posted March 22, 2011 at 5:04 pm | Permalink

        Ok let’s tax the rich more.

        •How much should we tax them?
        80% would be a good starter.
        The rate under Nixon was 70%. Under Eisenhower it was 91%. You might be curious as to whether Ike actually wanted such a high tax rate on the Rich, or was somehow forced into it by, say, a Democratically-controlled Congress. It turns out that when Ike ascended to the Presidency, both houses of Congress were indeed controlled by a single party – the Republican party. Republicans controlled the Presidency, the House, and the Senate – they could have done anything they wanted. And some in Congress did pressure Ike to roll back taxes on the rich, but he held the line, saying:
        “We cannot afford to reduce taxes, reduce income,until we have in sight a program of expenditure that shows that the factors of income and outgo will be balanced.”

        •Should there be a cap on how much the rich are taxed?
        No. It should be provisional and based on the status of our national debt. In Michigan, the Governor has taken Draconian measures to have the ability to remove elected officials and replace them with corporate managers, saying that the rights of the voters will be restored after the financial stability of Michigan is secured. That very same logic should be applied here. Until the National Debt is reduced to something managable, the tax rate should be open ended. What’s good for the goose is good for the gander.

        •How should the taxes collected be used?
        To pay down the National Debt.

        •who should this debt be redistributed to and in what percentage?
        Explain what you mean by “debt redistribution”? The majority of the Debt is carried by the wealthiest in the country.

        •Should the rich be able to benefit like everyone else does in this debt redistibution?

        First of all, there is no debt-redistribution if by that you mean that the middle class and poor receive checks or anything of that nature. But as to your question of the rich benifiting from anything of that nature the answer is no. They already benefit from a system that enabled them to be rich in the first place. That’s their benefit. They’re rich.

        •Should we put limits on the way debt redistribution is spent/used by those it is being redistributed to?

        The debt isn’t redistributed to anyone. The debt is paid down through a higher tax rate on the super wealthy. That’s where the money goes. Not into anybody’s personal pocket.

        •What should we do if someone misuses the debt redistributed to them?
        Again, your question doesn’t apply. There is nobody getting any money to misuse. The money received through taxes goes to paying down the national debt. The burden of the debt is simply taken off the backs of the middle class and the poor who can’t afford it, and re-distributed to the backs of the rich who can. They have benefited from a system that has made them rich. If they are as patriotic as many claim, then they should not have a problem digging into their pockets to support the very system that provided that wealth to them. It’s the patriotic thing to do. After all, they never send their kids to defend the country in a war. This is the least they can do for their country.

        •What do we do when there are more people receiving debt redistribution than there are people paying the debt?
        Nobody is receiving anything. Your question doesn’t apply.

        •What do we do when all those paying the debt move to greener pastures? Then who should pay the debt when no one is left to pay it?
        They won’t. And what makes you think that would happen? Nobody moved away when the tax rate was 90% or 70%. If they leave, they’ll be replaced. Where else can they go where they enjoy the benefits of American Citizenship?

        •What do we do if all the rich people decide to stop working, stop earning any money at all and they just live on what the currently have? Do we raid them?

        There is no reason to believe that it will? Are you advocating a “General strike”. Suppose the workforce uses the very same approach? Will the rich start working on the assembly lines? I’d love to see that. Regardless of what you read in Atlas Shrugged, that won’t happen. It never has and it likely never will. People find that American citizenship is important and freedom and oportunity come with a price. Ayn Rand wrote comic books. Some of us realized that in our 20′s and recoginzed that things are not black and white as she portrayed. We are not a society of Hero’s and dispicable vermin. And if they did leave, they’d be replaced. It’s beyond cynical to think that Americans are mere idiots with no initiative. We have an educated society. American inovation will continue as long as it’s promoted by a strong educational system. An educated work force is essential to a strong nation. You seem to subscribe to the Platonic view of the Philosopher Kings. Plato thought it essential that a strict threefold class division be maintained. In addition to the rulers, the Philosopher-kings, there were to be “Auxiliaries” (soldiers, police and civil servants) and the “Workers” (the rest of us).
        Putting it mildly, Plato’s view was that we are ineradicably social, and that the individual person was not, and could not, be self-sufficient. In fact, Plato offered up humans like so many animals that could do nothing for themselves unless they had constant and detailed direction from those who were to be their leaders:
        “… And even in the smallest manner … [one] should stand under leadership. For example, he should get up, or move, or wash, or take his meals … only if he has been told to do so. In a word, he should teach his soul, by long habit, never to dream of acting independently … There will be
        no end to the troubles of states, or of humanity itself, till philosophers become kings in this world, or till those we now call kings and rulers really and truly become philosophers, and political power and philosophy thus come into the same hands.” (The Republic.)

        Today we are plagued by Identity Philosophers. Truth, although a value to most people is not the most important value to these people. The most important value is solidarity with the group. To maintain that, truth is expenadable.

      26. Marlin
        Posted June 14, 2011 at 11:53 am | Permalink

        I understand differant form of Goverment very well. I here that Super Rich will leave this country if the are taxed . We spend way to much money on War . 500 billion dollars year is spent on war. To protect country that want protect them self . Why don’t we tax other countrys for protection ???? Let China , be new world police . drain all there money.

      27. Brian
        Posted June 30, 2011 at 2:56 am | Permalink

        You people are really naive to think any political party will change the trend of radical wealth distribution in America. Republicans are not responsible, nor are the rich. It is the SUPER-RICH that control this nation, and they can swing their weight regardless of who the president is or who the majority leaders in congress are. WAKE UP! You live in THEIR world. The world they built and moulded for themselves to ensure they never fall. The only way to break the cycle is to break the system and completely overhaul the economy and government.

        @ Larry Allen Brown: Taxing the rich will do nothing. The people who should be taxed are above the law and above taxes. Increasing taxes on the rich will only burden the top 80-99% of the richest people who have made their money through hard work and ingenuity. The top 1% will find ways to evade these taxes to ensure they keep their 35% of the nations total net wealth.

      28. Herb Rudolph
        Posted July 7, 2011 at 1:37 am | Permalink

        Doesn’t anyone out there realize that of all addictions, MONEY rules supreme.
        To cure the problem we need to usher our upper 1% into rehab.
        I would include our political leaders for both MONEY & POWER addictions.

      29. Glen S.
        Posted July 7, 2011 at 7:13 am | Permalink

        Both the New York Times and Washington Post are reporting this morning that President Obama — as part of secret, ongoing negotiations with Congressional Republicans to reach an agreement to raise the U.S. debt ceiling — is willing to agree to major cuts to Medicare and Social Security, in return for some “unspecified revenue increases.”

        So, rather than fight to make the super-rich and corporations pay even a bit more in taxes (which are now are nearly at historically low rates); or, God-forbid, wind down our multiple unnecessary wars, Obama seems poised to sabotage the two programs that represent the core of “Democratic” values — once again, alienating the liberal base, while also pissing off one of the Democratic Party’s most loyal voting blocks (Seniors).

      30. Glen S.
        Posted August 19, 2011 at 9:19 am | Permalink

        It is no exaggeration to say that Jon Stewart is the closest thing our generation has to an Edward R. Murrow:

        http://www.thedailyshow.com/watch/thu-august-18-2011/world-of-class-warfare—warren-buffett-vs–wealthy-conservatives

        http://www.thedailyshow.com/watch/thu-august-18-2011/world-of-class-warfare—the-poor-s-free-ride-is-over

      31. Glen S.
        Posted August 31, 2011 at 6:38 am | Permalink

        MSNBC – January 31, 2011: At least 25 top United States companies paid more to their chief executives in 2010 than they did to the federal government in taxes, according to a study released on Wednesday.

        The companies — which include household names like eBay, Boeing, General Electric (Msnbc.com is a joint venture of Microsoft Corp. and NBC Universal, which is jointly owned by Comcast Corp. and General Electric) and Verizon — averaged $1.9 billion each in profits, according to the study by the Institute for Policy Studies, a liberal-leaning research group. But a variety of shelters, loopholes and tax reduction strategies allowed the companies to average more than $400 million each in tax benefits — which can be taken as a refund or used as write-off against earnings in future years.

        http://www.msnbc.msn.com/id/44338047/ns/business-us_business/#.Tl4c4ZYzJzB

      32. Demetrius
        Posted January 31, 2012 at 9:04 am | Permalink

        http://dealbook.nytimes.com/2012/01/20/raucous-hazing-at-a-wall-st-fraternity/?pagemode=print

      33. khumbulani
        Posted May 7, 2012 at 8:47 pm | Permalink

        Plutocracy is bullying on the poor people very bad The worsening impact of it is that it is against job creation and it makes life of ordinary people very bad as it seal from them It also cause huge hegemonic blocs in the society I think god oppose it in a huge way.It needs to be substituted with the system that will bring about the balanced economy from the socialist ideas.

      34. Fudgy the Whale
        Posted October 14, 2012 at 12:06 am | Permalink

        I find it interesting that the word “plutocracy” didn’t come into existence until 1652, and wonder what word or phrase people used before them to express the observation that rich people run things.

        This is from Wikipedia.

        “The word plutocracy is almost always used as a pejorative to describe or warn against an undesirable condition,and throughout history political thinkers such as Winston Churchill, 19th-century French sociologist and historian Alexis de Tocqueville and 19th-century Spanish monarchist Juan Donoso Cortés have condemned those they characterize as plutocrats for ignoring their social responsibilities to the poor, using their power to serve their own purposes and thereby increasing poverty and nurturing class conflict, and corrupting their societies with greed and hedonism.

        The word is used to describe these two distinct concepts: one of a historical nature and one of a modern political nature. The former indicates the political control of the state by an oligarchy of the wealthy. Examples of such plutocracies include the Roman Republic, some city-states in Ancient Greece, the civilization of Carthage, the Italian city-states/merchant republics of Venice, Florence, Genoa, and pre-World War II Empire of Japan zaibatsu.”

      35. RHO
        Posted February 19, 2013 at 2:03 pm | Permalink

        Peter Larson, you are just stupid. The Tea Party is not a movement of plutocrats. It is a grass roots movement that is fighting plutocracy. One of the control mechanisms of plutocracy is government regulation and taxation. Get a clue, you are a total idiot.

      36. Red
        Posted March 23, 2013 at 5:18 pm | Permalink

        All your worrying was for nothing. In the years since you posted this, things have gotten exponentially better.

      37. Demetrius
        Posted December 9, 2013 at 1:16 pm | Permalink

        David Simon: ‘There are now two Americas. My country is a horror show’

        The creator of The Wire, David Simon, delivered an impromptu speech about the divide between rich and poor in America at the Festival of Dangerous Ideas in Sydney, and how capitalism has lost sight of its social compact. This is an edited extract.

        http://www.theguardian.com/world/2013/dec/08/david-simon-capitalism-marx-two-americas-wire

      2 Trackbacks

      1. By Another post on the Bush tax cuts for the wealthy on November 21, 2010 at 3:22 pm

        [...] in spite of this lock-step march toward Plutocracy, Buffet, and other high net worth individuals, like Bill Gates Sr., keep pushing back – trying to [...]

      2. By What are you thankful for? « Crunchy & Chic on November 23, 2011 at 7:39 pm

        [...] Thanksgiving is just around the corner and so many topics come to mind that I could write about. There’s giving thanks to relieve ourselves of our money on Friday, “pardoning” a pair of turkeys for the crime of not being human (naturally, they deserve the death penalty), and, of course, the whole point of the holiday: to celebrate the beginnings of the first Occupy movement—”Occupy America”, a European-led movement that successfully took over the continent and turned Americans into the 1% (well, more like 0.9%), but without any of the perks like having a say in the nation’s future. [...]

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